What are the current specific obligations for purchases and leases for a Chocolate Bash franchise?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
fic Obligations
The following are our current specific obligations for purchases and leases:
- A. Real Estate. Your business location is subject to our approval and must meet our specifications. You must use reasonable efforts to have your landlord sign our form of Rider to Lease Agreement (attached to this disclosure document as Exhibit D).
- B. Insurance. You must obtain insurance as described in the Franchise Agreement and in our Manual, which includes (i) "Special" causes of loss coverage forms, including fire and extended coverage, crime, vandalism, and malicious mischief, on all property of the Business, for full repair and replacement value (subject to a reasonable deductible); (ii) Business interruption insurance covering at least 12 months of income; (iii) Commercial General Liability insurance, including products liability coverage, and broad form commercial liability coverage, written on an "occurrence" policy form in an amount of not less than $1,000,000 single limit per occurrence and $2,000,000 aggregate limit, (iv) Workers Compensation coverage as required by state law. Your policies (other than Workers Compensation) must list us and our affiliates as an additional insured, must include a waiver of subrogation in favor of us and our affiliates, must be primary and noncontributing with any insurance carried by us or our affiliates, and must stipulate that we receive 30 days' prior written notice of cancellation.
- C. Point-of-sale software and hardware, and related software and hardware. You must purchase (or lease) the point-of-sale software and hardware, and related software and hardware, that we specify. See Item 11 for more details.
- D. Inventory, Supplies and Equipment. You must purchase inventory, supplies and some of the equipment from us. For items which are not purchased from us, you will purchase from approved suppliers.
Us or our Affiliates as Supplier
We are a supplier of some of the goods and inventory which you must purchase.
These are the items which will be purchased directly from us:
- 1- Pancake mix
- 2- Waffle mix
- 3- Crepe mix
- 4- Belgium chocolate ( milk-dark-white )
- 5- Pistachio spread
- 6- Karak tea
- 7- Turkish coffee
- 8- Uniforms for Staff
- 9 Specialty Dine In Plates
Ownership of Suppliers
Outside of your requirement to purchase some items directly from us or our Affiliates, None of our officers owns an interest in any supplier to our franchisees.
Alternative Suppliers
If you want to use a supplier that is not on our list of approved suppliers, you must request our approval in writing. We will grant or revoke approvals of suppliers based on criteria appropriate to the situation, which may include evaluations of the supplier's capacity, quality, financial stability, reputation, and reliability; inspections; product testing, and performance reviews.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 15–17)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, franchisees have several specific obligations regarding purchases and leases. Chocolate Bash must approve the business location, and it must meet their specifications. Franchisees must make reasonable efforts to have their landlord sign Chocolate Bash's Rider to Lease Agreement. Franchisees are also obligated to obtain specific insurance coverage, including property insurance, business interruption insurance covering at least 12 months of income, Commercial General Liability insurance of not less than $1,000,000 single limit per occurrence and $2,000,000 aggregate limit, and Workers Compensation coverage as required by state law. These policies, excluding Workers Compensation, must list Chocolate Bash and its affiliates as additional insured, include a waiver of subrogation, be primary and noncontributing, and provide 30 days' prior written notice of cancellation to Chocolate Bash.
Chocolate Bash franchisees must purchase or lease the point-of-sale (POS) software and hardware that Chocolate Bash specifies, with further details available in Item 11 of the FDD. Franchisees are required to purchase inventory, supplies, and some equipment directly from Chocolate Bash, while other items can be sourced from approved suppliers. The items that must be purchased directly from Chocolate Bash include pancake mix, waffle mix, crepe mix, Belgium chocolate (milk-dark-white), pistachio spread, Karak tea, Turkish coffee, uniforms for staff, and specialty dine-in plates.
Chocolate Bash estimates that required purchases and leases account for 50% to 70% of the total costs to establish the business. For operating the business, required purchases and leases are estimated to be 50% to 60% of the total. Chocolate Bash currently derives revenue from these required purchases and leases, accounting for $10,387 and 5% of their total revenue. While Chocolate Bash does not currently receive payments from designated suppliers based on franchisee purchases, the franchise agreement does not prohibit them from doing so in the future.